How SIP in mutual funds can make you a double Crorepati

Systematic Investment Plan as the name suggest is one of the most systematic way to invest indirectly in equity markets at regular intervals that may be daily, monthly or quarterly.
For Example: If Arun has started off a SIP of Rs 5000, it means every month Rs 5000 gets deducted from his bank account and gets invested in a mutual fund scheme selected by him on a given particular day of the month


What are advantages of investing through SIP in Mutual Funds which takes you to become a Crorepati


There are two advantages of investing in mutual funds through SIP. Rupee Cost Averaging and Power of Compounding


Power Of Compounding
Let me explain this with the help of example. Suppose Abhishek started a SIP in Mutual funds in one of the best equity diversified funds of Rs 5000 in 2001. This means his total investment till December 2010 (a total of 120 installments) works out at Rs 6,00,000. As most of the mutual funds have given more than 16% returns from 2001, his wealth would have grown to around 18,00,000 in 2010 and if Abhishek doesnt invest more and stop his SIP at this time, after 10 years, he can expect his money to be around 90,00,000 (90 Lakhs),. nearly becoming a Crorepati assuming 18% returns in the next 10 years which is possible by right selection of mutual funds and monitoring it year after year. This is done with a investment of just Rs 5000 per month for 10 years i.e Rs 600000 of total investment.


Rupee Cost Averaging
Rupee Cost Averaging is the process of buying mutual funds where you are a buyer at each level of market i.e at higher levels of market and at lower levels also. The mutual fund units purchased at lower levels gives you a chance to average out your investment at lower price and thus get significant returns. Mind you, even a 2% annualised returns can make a big difference to your mutual fund portfolio


Never under estimate the power of compounding. Invest systematically and become a double Crorepati by investing in mutual funds through SIP.


If you like this article, you may also read

• SIP in Mutual Funds is the best
• Rupee Cost Averaging takes you to become a Crorepati
• Dont Trade but Invest for Simple reasons

Why do you need a good financial planner

What is financial planning as a concept?

Financial Planning in simple words means planning your finances in such a way that you are able to invest your income in the right direction and thus create long term wealth and managing your finances in a way which helps you to meet financial goals like Child education, daughter marriage and retirement planning.

When do you need a financial plan?

A lot of people think that there are just in late 20’s or early 30’s, why do they need to think about future which is going to come after 15-20 years. Well, planning for finances in advance also helps in creating wealth and meeting long term financial goals. So the best time to review your financial plan is today

Why do you need a financial Planner

You need a financial planner because of the following reasons

1. Updated with all financial products

Every person is the master oh his trade, and so is financial planner who will assess your requirement and suggest you the best suitable financial product to you. Spending money on buying insurance or mutual funds doesn’t help you in meeting long term financial goals, but along with it, proper planning is required. You need a financial planner who will analyse your risk profie, your current income and finally fit you the best term plan or mutual fund or fixed deposit as per your need.

2. High Level of Service

Financial Planning is not a one day process. It is more of a continuous process where your financial planner would monitor your investments every year and make changes to your portfolio which the change in the economic conditions in India and changing debt markets scenario. As he is getting paid to render you quality service, he is likely to do well as compared to so called mutual fund agents or insurance agents.

3. Understands your complex financials

A good financial planner would analyse a lot of things and understand your financial goals before asking you to invest somewhere. Like

·         Your current take home salary

·         Your savings scenario

·         Your monthly expenditure

·         Your current fixed assets

·         Your future goals

·         Your insurance requirement

·         Your contingency plan

After asking and analysing all the above points, he will design a picture in his mind and design a financial plan for you and your family needs

4. His Experience would be of good use to you

The financial planner must have dealt with a lot of people with different situations. As a experienced financial planner, he must have seen the ups and downs of the equity and debt markets. He would guide you to a conclusion where you are benefited with high returns in a long run

Do leave your valueable comments if you feel in favour or against the concept

Best Term Insurance Policies for 2012

A lot of investors in India have realised the importance of term insurance plans vis-a-vis whole life policy and endowment plans which are quite expensive in nature as compared to term plans. 
But there are a lot of questions which comes to their mind while choosing a term insurance plan and choosing the best term insurance plan.


Question 1- Do they buy term insurance from LIC or private company?
Question- Should premium amount to be paid should be the only consideration in deciding term insurance plan
Question 3- Should they go for offline or online insurance plan keeping the cost factor into consideration


I am going to answer all these questions but before that lets understand, why do you need term insurance:

• Just because in case of your untimely death, you family dependents doesnt have to suffer too much on account of finances apart from emotional loss
•  After your death, your child needs higher education which may cost around 25-30 Lakhs after 12-15 years considering a annual inflation rate of 8%
• After you death, your wife has to take care of your child marriage which may cost around 40-50 Lakhs after 15 years

Generally one must choose a term insurance plan on the basis of brand name of the company and financial health of the company and most important the percentage ratio of claim settlement called claim settlement ratio of insurance policy. Generally life insurance premiums from LIC would be on higher side and they also have high claim settlement ratio. 

Lets have a look at the life insurance premiums offered by some of the insurance companies which can give us a sense of best term insurance policies:

	Sum Assured	Age of Policyholder	Tenure of the policy	Premium
Met Life	30 Lakhs	30	25 Years	4269
Kotak Life	30 Lakhs	30	25 years	4739
ICICI Pru Life	30 Lakhs	30	25 years	5129
HDFC Life	30 Lakhs	30	25 years	8512

One can buy online term insurance plans which are much cheaper as compared to offline term insurance policies because of high commissions involved in offline insurance policies. 

Another important point to look at while anlysing term insurance policies are riders

1. Accidental Death Riders- This means you will get additional life cover but only if you get death from accident

2. Critical Illness Rider- This will help you to get additional life cover if you die due to the illness mentioned in the policy while buying it

3. Disability Rider- This rider covers you for disability and pays you life cover in some predefined installments in the case where you become permanent disable

4. Waiver of Premium- In case you become permanently disable due to some accident, you would be waived off for the future premium payments while your term insurance policy will remain in continuation

Finally while choosing the term insurance plan, one can recommend choosing HDFC Life Insurance which has high claim settlement ratio though it has high premium, this option may be one of the best term insurance policies in India.

Do leave your comments if you have any query regarding any term insurance plan

Buy Cadila Healthcare- On the verge of Breakout

Buying on breakouts is one of the best strategy for traders when the price crosses its previous high. This means after reaching at the same point, there is a tough fight between bulls and bears and if crossed the previous level i.e resistance we can easily see bulls coming in with huge pressure pulling the stock upwards.


Cadila Healthcare, one of the safest bet in the pharma space and pharma sector itself being a defensive sector, one can buy ino this stock whivh is trading at its all time high level even in this downtrend markets of Nifty. One can trade on this stock with a stoploss of 2.5% below the buying price. 

Cadila Healthcare is on a verge of breakout and the stock can give a quick move to 990-1000 in extreme short term. Even the risk seems to be on the lower side as it belongs to the most defensive sector i.e pharma space which is the least volatile sector.

Traders can buy above 942 with a stoploss 910

(Image Source:www.nooreshtechtech.co.in)

To get more stock ideas, you are open to post your comment below the article

Regards

Mayank Gupta

SIP in Mutual Funds  | Portfolio Advisory

Long Term Investment in a Pharma Stock

Well, in this volatile markets, a lot of Investment managers, fund managers would recommend you to invest in defensive sectors like Pharma & I am none different opinion. In the current high interest rate scenario, one should look to invest in defensive sectors which have no or small amount of debt in their books of accounts as high interest rates are eating up majority of the profits of high debt companies like Unitech, HCC, DLF, GMR Infra.

I would advise my readers to invest in defensive sectors & one such good stock is Divis Lab. A good fundamental stock with technicals working in its favour. 

Market Cap- 10405 Crores
EPS- 32.85
Dividend %- 300%
PE Ratio- 22 (low for any debt free pharma stock) 

(Source:www.nooreshtech.co.in)




If you like reading this article, you may look up to read these articles

1. Dont Trade, But Invest
2. Portfolio Advisory
3. SIP in Mutual Funds is the best
4. What should be the entry point for Nifty

Is Recent Fall a Market Crash?

Dear Readers,


There is no reason to panic in such markets, where the markets are not doing much but just moving sideways. If I generally look at the Sensex or Nifty levels since the start of this year, no one can term it as a crash.


Why???


Sensex on 1st Jan, 2011- 20500
Sensex on 31 May, 2011- 18503


It is hardly a 10% fall. If you cant sustain a 10% fall, then equities may not be the right investment product for you. Go and invest in debt funds.


Some other people have their own apprehensions. They feel that I have invested in a large cap like State Bank of India. It is down to 2250 odd levels after making highs of 3200 on 31 Dec 2010. What should I do?
I have an answer for them also. I always recommend my readers to have a portfolio of stocks that may be 12 to 15 in number fro atleast 6-8 sectors to diversify their investments rather than buying a single stock on news and hoping it to do miracles for you. Yes, Miracles do happen, but no always in realistic world. I hope you have understood me, dont over try to become rich overnight & get yourself in a trouble. I have given enough multibagger ideas in my previous posts & I hope it will help my readers to gain out of it. Have a long term investment horizon and hope the equities to outshine in 2-3 years. 


If you want some more multibagger stock ideas , do comment in the section given below and lets discuss within the members of this blog.


If you like reading this article, you might also love reading,

1. Dont Trade, But Invest
2. What should be the entry point for Nifty
3. How to Invest
4. SIP in Mutual Funds is the best

Regards

Mayank Gupta

mayankportfoliomanager@yahoo.com

Thoughts about Petronet LNG

Petronet LNG- a stock in the Oil & Gas sector backed by strong management. It was initiated by Govt of India in 1998 and is into LNG procurement. For investors of Petronet LNG, one must know that the four promoters ONGC, GAIL, BPCL, OICL each holds 12.5% stake in the company. Looking at the history, Petronet LNG doesnt have any history of bonus in the past but the company has declared dividends on various occasions.

• 2007- 13%
• 2008- 15%
• 2009- 18% 
• 2010- 18%
• 2011- 20%

The company's Net profit was standing at 313 Crores in 2007 vis-a-vis a net profit of Rs 619 Crores in FY11 showing a 100% return growth in profits in nearly 4 years. Lookig at the fundamentals, I am neutral on the stock as the valuations are looking quite streched. If one is holding this stock in his portfolio, he may continue to hold.

Looking at the technicals,the stock is nearing its all time high of 144 and has a huge support at 105 odd levels.  I dont expect the stock to break its strong support levels of 105.

Regards
Mayank Gupta
mayankportfoliomanager@yahoo.com




If you want to discuss something on the stock, you may post a comment & if you like this article, kindly read

1. SIP in Mutual Funds is the best
2. Portfolio Advisory
3. Dont Trade But Invest
4. What should be the entry point for Nifty 

What should be the entry point for Nifty

After a healthy correction in Nifty since Diwali on 5 november, 2010. Everyone is looking for a good entry point in stock markets. Everyone want to know what is the best time to enter into stocks. Is 5500 a bottom or 5300 a bottom for the markets or market will break 5177 levels which Nifty made a low some 2 months back.


If you ask me, Nifty is trading at e PE Multiple of 15 FY12 estimated earnings of 1205 & in the past Nifty average PE Multiple is 15 to 18. Analyzing PE Ratio & technical Analysis, 5177 seems to be bottom for the market & I would request my clients to start accumulate multibagger stocks (60% quantity at 5400 levels & remaining 40% at 5150 levels if comes)


Banking stocks or Bank Nifty has been a clear underperformer & a big support level of 10000. So one needs to accumulate banking stocks at those levels.


Nifty seems to be forming a head & shoulders pattern which is the most reliable pattern in Technical analysis







Now after explaining you what is a head & shoulder pattern, lets see how this head & shoulder pattern looks on Nifty chart. The chart given below is a 1.5 year old chart of Nifty. Nifty is forming a head 7 shoulder pattern as per indicated in the chart given below



(Source:www.nooreshtech.co.in)


If you want to get some multibagger ideas, you can ask me by putting comments below the article or mailing me at mayankportfoliomanager@yahoo.com. I would be more than happy to discuss multibagger ideas with you.


Regards
Mayank Gupta
mayankportfoliomanager@yahoo.com

Answer to "How to Invest"

Dear Readers,
A lot of investors in India are looking for value picks which they want to add up in their Portfolio & earn multibagger returns over the next 2 to 3 years.
The biggest mistake which the Indian investors make is making their complex calculations or their own analysis without getting deep into the waters of Investments. But if you just think back & just study the stock markets in a simple way & not try to become rich overnight, I am sure, you can earn 10 bagger returns in 10 years or 10 times returns in 10 years. This is based on the simple funda of stock allocation to different sectors rather than deploying your entire capital to one stock.





Diversify your Investments
The better way to deal is to make your investments in diversified sectors & adding atleast 15-20% of your Portfolio size to defensive sectors like Pharma & FMCG stocks. One of my all time favourite FMCG stock is ITC Limited, though I wont advise you to buy at current levels of Rs 190. I would wait for a correction & may be then look to accumulate the stock.


There is nothing called "Good Stock"
Think beyond this term "Good Stock". Always look to buy a company rather than a stock.When somebody tells you about a good stock to buy, think beyond a stock or a stock chart. Look at the business of the company, what they do. If you not able to do that, leave this job to your Investment planner or financial planner


Buy in Parts
Just like SIP in Mutual Funds, also try to do SIP in stocks. This would help you to get rid of market volatility. You should have sufficient cash at all levels that you should be a buyer at each level of market & thus average out your buying price in investments. These are some rules of Investment Mangement & Portfolio Mangement or Portfolio handling.


Understand the Importance of every Profession
Understand the fact that just like doctors give you advise & treat your body parts or take care of your health, likewise, a fund manager would be responsible for keeping a check on your finances (health in case of doctor, lawyer in case of court cases). I hope this will make you undersyand in a much better way.


If you want some more advice regarding a particular stock, you are most welcome to leave a comment & ask...

If you like reading this article, kindly read

1. Best Mutual Funds in India
2. Rupee Cost Averaging takes you to become a Crorepati
3. Systematic Withdrawl Plan in Mutual Funds
4. Why do you need a financial Plan
5. Looking for Portfolio Advisory

Regards
Mayank Gupta
Portfolio Manger
mayankportfoliomanager@yahoo.com

Change a Job- Do's & Donts

When you should look for a change in the job

• When you start feeling that the current position you are holding in the company doesnt offer any future scope to grow
• When you start feeling that the managerial qualities which you have gathered in your past qualifications i.e MBA or Engineering or any other stream is not adequately utilized by the company & treating you as a mere dock boy
• When you start reeling your salary package CTC & feel you need a salary hike looking at the efforts you are putting to make your company grow
• When you get bogged down by sales to retail clients & you are not able to meet your sales target & look to change the sector. This type of situation mainly happens in Financial sector

Financial Do's & Dont's while changing your Job


1. Collect Form 16 from your Ex Employeer
The first & the foremost thing while changing your career is not forget collecting your Form 16 from your previous employeer at the end of financial year April of every year to make sure that you are not double taxed by both the employeers & also helps you in calculating the right amount of tax & helps in tax planning


2. Closing your Bank account with the previous employeer
Never ever forget to do this as holding multiple bank accounts with two banks is never advisable because of various reasons. The most important one of them is ofcourse being the bank charges levied to you every quarter for non maintenance of average quarterly balance (AQB). Your salary account would be converted into a normal savings account after 6-9 months. So it would no more be a zero balance account now. Different banks charges different amounts for non-compliance of AQB of Rs 10,000. HDFC Bank charges Rs 827 every quarter including service tax for non maintenance of average quarterly balance.


3. Tax Implications
If you are leaving your job in the middle of financial year & you dont declare your earlier deductions to your HR of new company which you have joined, the new company would use the same amount to calculate your tax liability. This may lead to double taxation


4. Invest Your Employee Provident Fund
I would always advise you to withdraw from existing EPF from your old company & invest in balanced mutual funds or invest in mutual funds (equity oriented) which in a long run give better returns than EPF returns of 8% 


I have added my viewpoint of do's & donot's while changing a job, if you have your viewpoints in same regard, you are most welcome to add a comment


If you like reading this article, also read

1. Best Mutual Funds in India
2. SIP in Mutual Funds
3. Dont Trade but invest for simple reasons
4. SIP in Mutual funds is the best

Regards

Mayank Gupta

mayankportfoliomanager@yahoo.com

SIP in Mutual Funds is the best

Mutual Funds in India has been the best option to get returns better than Fixed Deposits & SIP in Mutual Funds is the most suitable way to construct your Portfolio in a long run where you invest a fixed amount of money every month in different schemes of Mutual funds.

What is Systematic Investment Plan?

In simple language, SIP in Mutual funds means you instruct a Mutual fund company to debit your account with a certain amount and invest in mutual funds schemes where you intended to invest & in the process an investor is able to accumulate mutual fund units every month & build a big corpus in a long run.

How does a SIP helps??

1. You will never ever loose in a long run

Give me single instance where a mutual fund investor lost money in a 3 year horizon or a 5 year horizon when he invested in Equity mutual funds systematically. I know, there is no such instance. Lets take a real time example to explain this to help my readers getting a better view.

Example- Performance of HDFC Mutual fund, HDFC Top 200

Period	Total Investment Rs 5000 PM	Market Value	Returns (Annualised)
Last 1 Year	60,000	62,400	7.24%
Last 3 Years	1,80,000	2,66,666	27.41%
Last 5 Years	3,00,000	4,91,700	19.91%
Last 10 Yrs	6,00,000	31,40,850	31.15%
Since Inception 1996	8,75,000	80,44,000	27.04%

Also there is no Mutual funds in India which has given a negative return or NAV of Mutual Funds has never been negative if a investor holds on for 3-5 years. HDFC Top 200 Fund is the best performing funds in Equity Diversified Funds.

2. Helps you invest systematically

Lack of disciplined approach to investing hinders the financial goals of any investor. The retail investor always tries to buy in his own way & is always caught at the top when others are greedy. The solution to this problem is SIP where the investor invests every month without looking at the NAV of mutual fund. He instructs his banker to debit his account every month by such & such amount & I am sure he would be getting a NAV of mutual funds schemes at a much lower price than Lump sum Investment. 

3. Benefit of Rupee Cost Averaging 

It helps you take the advantage of Rupee Cost Averaging. It is the process of buying units of Mutual funds at regular intervals that may be monthly & accumulate in a long run without looking or considering the current NAV of the fund. For reading the detail about Rupee Cost Averaging, read this article

Rupee Cost Averaging takes you to become a Crorepati

4. Answers to the Famous Questions in Stock Markets?

 It helps you to take away from the famous questions which every investor has.

• What is the bottom of the market?
• Should I buy today or wait for further correction
• I will invest later on, the market has already run up too much
• I am waiting for a correction & when the correction will come you will not have the money to invest

After reading this article, you may Invest in SIP & Download SIP Calculator

Also read

1. Systematic Withdrawl Plan
2. Portfolio Advisory and Mutual Funds
3. Endowment Plan
4. Dont Trade But Invest for Simple Reasons

Regards
Mayank Gupta
Founder
mayankportfoliomanager@yahoo.com
http://www.wealthbazaar.in/

Number of Income Tax Payers in India

Population of India has crossed 120 Crores or more 1.2 billion.


Looking at the total number of Income tax payers in India, at present, there are 35 million tax payers in India which has increased from  28.4 million taxpayers in 2002 to 31.5 million tax payers in 2006 in India which is nearly 3-4% of the total population of India which is quite low as compared to the developed economies which have nearly 44% of the total population paying taxes out of the total population of 310 million.





The numbers mentioned above are for Income Tax payers only, but there are a lot of transactions happening  around the country in the form of indirect taxes especially Service Tax  


This huge gap between the India & United States tax payers is mainly because of the organised sectors & industry in US & online bank transfers happening over there as against people paying in cash to labour & agricultural workers who doesnt come under the tax bracket. This huge gap is expected to reduce in the coming years because of the expected orgainsed sector boom in India i.e Retail, Infrastructure, IT etc


I would also like to mention here about the advance Tax collection numbers which Indian Govt collect every year is close to 1000 Crores or 10 billion


If you like this article, kindly read

1. Dont Trade, But Invest
2. Personal Financial Planning in India 
3. Best Mutual Funds in India